Strategic Information System Agility

From Theory to Practices

Abdelkebir Sahid, Yassine Maleh, Mustapha Belaissaoui

• Publisher: Emerald Publishing Limited
• Year: 2020
• ISBN:
  9781800438125
• Topic: Business
• Subtopic: Information Management
• Index: Business

A company's ability to evolve more efficiently than its competitors in a complex, dynamic and unpredictable environment gives it an undeniable advantage. In this context, and with the increasing automation of manufacturing and decision-making processes, the value of IT use is reinforced and becomes an asset for the company, provided that it achieves IT agility and can maintain it. However, practice and research remain unsatisfactory in providing useful answers on how to achieve agility in this environment.
Strategic Information System Agility: From Theory to Practices is an invaluable resource to discover the strategic information technology agility in organizations. The purpose of this book is to improve the awareness of strategic information system agility. This book focuses on the impact of IT systems' strategic agility on organizations' business performance in response to highly uncertain and unexpected events that are potentially significant. The book also includes frameworks, practical solutions and technological advances related to IT agility, and draw from the real world of business through case studies in large organizations.
The book offers comprehensive coverage of essential topics, including: Agility Concept, Enterprise Information System Agility, Conceptual IT Agility, Strategic IT Service Management Agility, Cloud computing as a driver of IT Agility.The authors deliver comprehensive coverage of the elements necessary for the development and the implementation of effective Information systems strategic agility. Providing the concept, theory, modeling, and architecture of an agile information system, covering the state of the art, concepts, and methodologies for developing information.

Chapter 1

Introduction

1.1 Context

Nowadays, managers increasingly require a proactive and reactive response to uncertain internal and external events and opportunities, demonstrating flexibility and agility of action to match the company’s operational performance. The issue is that organizations are generally not prepared to deal with significant uncertainties and unpredictability. Usually, business practices were certain and predictable (Kidd, 1995). Likewise, information systems are not developed to cope with change and unpredictability. Consequently, for many companies, information technology (IT) is a significant factor that constraints business agility requirement.

A study by Tucci, Mitchell, and Goddard (2007) shows that less than half of chief executive officers’ CEOs trust IT to contribute to the success of their business. An MIT study of 1,500 IT managers shows that 71% of American companies are in phase 1 or 2 of enterprise architecture maturity (Ross & Beath, 2006), which explains why IT is a barrier to business agility in many organizations.

The lack of agility hurts the company’s performance, for example, due to delays in the launch of new products. Thus, according to Foster and Kaplan (2001), a six-month delay in the product launch in the pharmaceutical and cosmetics industry has decreased the product’s turnover by more than 30% over its lifetime. Another example is General Electric’s plan to save $10 billion with real-time information in its GE cockpits for monitoring the company’s performance and rapidly adapting to changes required (Melarkode, From-Poulsen, & Warnakulasuriya, 2004).

There are significant differences between companies’ ability to detect uncertain and unexpected events in different sectors of activity to react quickly by changing their operations and business processes. With this quality, the company can cope with surprising and unavoidable changes by expanding (or reducing) these specific capacities or reducing cycle times beyond current levels of flexibility (Sengupta & Masini, 2008).

These two examples highlight the benefits of IT in improving responsiveness and agility. This book analyzes the role and impact of IT agility on operational agility to help organizations deal with uncertain and unpredictable consecutive events.

Today, agility has become a necessary quality, especially in an always unstable economic environment, making it mandatory, even indispensable (Conboy, 2009; Imache, Izza, & Ahmed-Nacer, 2012; Sharifi & Zhang, 1999; Zhang & Sharifi, 2000). Likewise, IT agility has become the primary purpose of any information systems’ department, a quality that any company must have, to meet the customers’ needs, face competitiveness challenges and rapid technological evolution.

Faced with the various transformations and needs of the internal and/or external environment, it is essential to structure the company’s information system (EIS) to facilitate its evolution and modify its positioning, structure, and skills. All this in harmony with the company’s strategic development, while ensuring global consistency in terms of permanent IT alignment with the global strategy, interoperability, integration, autonomy, and flexibility. In other words, the EIS must be agile.

1.2 Why Agility Now?

The following chapter introduces the topic and provides an overview of the research contributions included in this book. We ask, “Why agility now?” We believe there are at least three answers. First, it is becoming increasingly difficult to survive and succeed in today’s business environment. Being agile, able to detect and react to predictable and unpredictable situations is a promising strategy in times of change and uncertainty. Recently, an essential activity on agility has promoted in the form of agile software development, agile manufacturing, agile modeling, and agile iterations. The diffusion of IT is a process that takes time and effort. Many IT projects succeed in developing a product, but fail to achieve goals. The importance of information systems’ agility for rapidly changing business environments was recognized, particularly in the digitalization age. In this field, agility refers to the ability to provide solutions promptly and to adapt quickly to changing requirements.

For a long time, the business environment has been relatively stable, with gradual changes. In the event of a radical change, the rate tends to remain relatively slow without being quickly followed by other significant changes.

In this relatively stable environment, organizations were not encouraged to be proactive in their response to internal and external events promptly. More specifically, as a communication and transaction infrastructure, the Internet has caused (and will continue to create) turbulence and uncertainty in business and consumer markets, as well as its ability to connect everyone and everything.

Changes and events in the economic environment were generally predictable. Nevertheless, technology, innovation, public policy changes, and deregulation are destabilizing the business landscape and redesigning this world (Hagel & Brown, 2003).

Friedman (2005) argues that the twenty-first-century globalized world has flattened the world. Radical “non-linear changes,” leading to a different order are becoming more frequent. Moreover, the pace of change is significantly faster. Business-networks are becoming more sophisticated and interconnected. The boundaries of the industry are becoming blurred (finance, media, telecoms, and IT converge) (Bradley & Nolan, 1998). However, re-intermediation has created new stakeholders with new capacities, delivering new services to end clients.

Regulatory changes and external requirements for accountability, sustainability, and security have a significant impact on the products, processes, and organization’s resources. To maintaining its competitiveness and perseverance over time, a company must be able to detect uncertain events, react quickly, and learn from experience (Dove, 2002).

Agility gives organizations the ability to quickly detect and respond to unpredictable events, and meet changing customer demands. This ability is essential in today’s business world.

New technologies and business practices are continuously introduced to create or change global market demands (Sengupta & Masini, 2008).

Two examples illustrate this. An example to understand the role of agility is the agility of IT services’ companies, which was challenged during the latest financial crisis in 2008. When “IceSafe” Bank, an Icelandic bank, encountered financial problems, its customers no longer had access to their savings’ accounts over the Internet from one day to the next, which caused a major panic among IceSafe and other bank customers in Europe. Consumers are seeking assurance that their funds are always safe and accessible through the Internet. The “IceSafe” bank’s website and account information were no longer accessible to customers, consequently a traffic spike on other banks’ websites. IT firms that provide IT hosting capacity and maintenance services for banks such as “IceSafe” should react quickly to maintain online banking services for their customers.

Another example is Volvo’s sales and IT initiative to manage the development and implementation of an agile supply chain in the aftermarket. Volvo has developed a platform, web services and a web portal for selling spare parts on the Internet. Indeed, the difficulties related to the creation and the integration of a new platform are accentuated by the pressure of establishing new relationships in the field of global logistics for Spare Parts. Volvo’s work illustrates agility by continuously working on scenario development and ensuring that projects are deployed correctly to support learning.

In the “Icesafe” Bank example, using intelligent agent software helps IT service firms by allowing them to identify a possible disruption of their web hosting services proactively. As a result, a response process was initiated to avoid a possible online banking suspension.

Through these two examples, IT can improve IS responsiveness and agility.

1.3 The Agility Role

Companies must increase their reactivity levels to cope with globalization and various internal and external challenges. Flexibility allows reactivity into organizations, processes, and systems, on a limited number of measures only. Except for that combined flexibility in a system, from the beginning, becomes costly.

A new concept is needed to survive in a turbulent environment and cope with market changes.

This concept, called agility, was introduced in the American automotive industry in the early 1990s. The Department of Defense requested that Lehigh University researchers develop a vision, a conceptual framework, and recommendations to create an effective industrial infrastructure. As a result of this work, the report entitled “21st Century Manufacturing Enterprise Strategy” (Nagel & Dove, 1991) was published by the Iacocca Institute at Lehigh University (Kidd, 1994). Following this first report, the Agility Forum is created to explore the agility concept in more depth.

Agile manufacturing was developed as a new manufacturing paradigm to address customer requirements in volatile markets. Agile Manufacturing incorporates the full range of flexible production technologies, the lessons learned from total quality management, “just-in-time” production, and “lean” production (Goldman, 1994).

Goldman and Nagel (1993) defined agility as the ability to succeed in a continually changing and unpredictable competitive environment and to react quickly to unforeseen changes in global markets, where demand for low-cost, high-performance, high-quality products, and services is paramount for customers.

Several publications on agile manufacturing and agile enterprises (Dove, 2002; Kidd, 1994, 1995) followed the work of Goldman and Nagel (1993) and Goldman, Nagel, and Preiss (1995). Subsequently, the concept was extended to supply chains and business networks (Mason-Jones & Towill, 1999; Swafford, 2004; Towill & Christopher, 2002; Van Hoek, Harrison, & Christopher, 2001; Yusuf, Gunasekaran, Adeleye, & Sivayoganathan, 2004). Recently, many researchers have analyzed how IT can support business agility and how agility can improve information systems performance (Desouza & Awazu, 2006; Sambamurthy, Bharadwaj, & Grover, 2003).

IT constitutes a key business agility asset and a significant capability that can hinder or facilitate business agility. Over the years, IT has considerably developed and achieved considerable maturity to optimize the use of limited and costly technological resources, roles and relationships have been defined (Hagel & Brown, 2001). IT has become standardized and shared knowledge through the years, reducing prices due to economies of scale.

The literature presents three research streams with different perspectives on the relationship between IT capabilities and organizational agility (performance). According to the first trend, IT capacity is not essential and does not hinder the company’s agility performance. The other view is that IT capabilities contribute to strengthening the company’s agility (performance). For the third stream, IT capabilities contribute to improving the company’s agility (performance), but under certain limited conditions and circumstances. This doctoral book will provide additional research resources related to the third stream.

1.4 IT as a Business Agility Obstacle

For decades, many studies have revealed conflicting, sometimes divergent, results regarding IT’s effects on the organization’s responsiveness and flexibility. In a survey of many business process re-engineering cases, Attaran (2004) found that “IT was the main obstacle to rapid and radical change, with the profound transformation of the IS requiring a redesign of the IS.” Cabled IT architectures, where business rules are incorporated into information systems, are a significant obstacle to rapid change. IT departments in large companies seem unresponsive and lacking in agility (Kearney et al., 2005). Among the main barriers to this unreliability are existing information systems, the excessive complexity of the IT architecture, and the reduced interaction between the company and IT; (flat Business-IT alignment) moreover, differences between Top Management and IT managers regarding the importance of IT and the appropriate time for new technology adoption.

IT infrastructure and application complexity prevents the rapid development and deployment of new systems to support business agility.

1.5 IT at the Service of Business Agility

IT can increase organizational agility through open standards-based information systems (which facilitate transformation between partners), involving the best functional areas and being flexible for change, due to lack of time, and low costs (Klapwijk, 2004). IT agility increasingly promotes business adaptability (i.e., business agility). Automation has moved from the back office (the 1980s) to the front office (the 1990s) to the automation of the IT infrastructure’s ability to adapt to each bu...